Notice and Severance

Notice Requirement

Termination of employment is regulated under the Employment Act. A worker may be terminated after serving due notice or paying in lieu of notice. Length of notice period depends on the type of employment contract.

  • Notice period is not provided for a worker hired on daily basis; contract may be terminated at the end of working day without any prior notice
  • at least seven days notice for workers during the probationary period (or payment in lieu of notice)
  • Workers who get paid periodically for intervals shorter than one month (e.g. on weekly or fortnightly basis), a notice of equivalent period (a week or 15 days) may be served prior to contract termination
  • If workers are paid on a monthly basis or longer interval, a 28-day notice must be served before contract termination

Length of notice period may be set in employment contract by mutual consent of employer and worker, provided that the period is more than that is provided by the Act. Notice should be written in language easily comprehended by the worker, otherwise someone has to explain it to the worker, orally, in language that he/she could comprehend.

If an employer fails to give the termination notice, he/she must provide the wages and benefits that the employee would have earned during the notice period on the basis of average daily earnings over the past 12 months (provision of compensation in lieu of notice). An employer is required to give reason of termination to the worker except in cases of summary dismissal and redundancy, but in all instances termination should be based in fair reasons (including termination by notice). It is prudent for an employer to follow a fair hearing/consultation procedure to explain reasons for termination prior to terminating a contract. A worker can still claim unfair termination and it is the duty of the employer to prove that the termination was fair and procedures were followed.

To decide whether termination was just and fair, the Industrial Court is required to consider the procedure adopted by the employer in the termination, the conduct and capability of the worker up to the date of termination, the extent of compliance by the employer of statutory requirements, the previous practice of the employer in dealing with circumstances that led to the termination, and the existence of any previous warning letters issued to the worker.

A worker may lodge a complaint with labour officer within three months from the date of the unfair termination. If the termination was unjust, he/she may recommend the employer to pay wages for the notice period required to be given; the proportion of wages due for the period the employee has worked and any other loss consequent upon dismissal arising between the date of dismissal and the date of expiry of the notice period; and the equivalent of a number of months’ wages or salary for a period not exceeding 12 months based on the gross monthly wage or salary of the employee at the time of dismissal. All the amounts are subject to statutory deductions.

Where the labour officer finds the dismissal/termination unfair, he or she may recommend that the employer reinstates the worker and treat him or her as if the employment was never terminated, or re-engage the employee in work comparable to the one prior to his or her dismissal at the same wage.

Source: § 35-36 & 43-51 of the Employment Act 2007

Severance Pay

There is no provision for severance pay in legislation for reasons other than redundancy. Redundancy means the loss of employment by involuntary means through no fault of a worker, involving termination of employment at the initiative of the employer, where the services of a worker are superfluous and the practices commonly known as abolition of office, job or occupation and loss of employment.

Severance pay, paid by the employer, in Kenya is equivalent to 15 days basic wages for each completed year of employment.

Employment Act also contains provisions relating to service pay. It is payable for each completed year of employment, in the case of termination by notice in certain circumstances and its terms are fixed in employment contract. A worker is not entitled to service pay if he/she is a member of Registered Pension Fund, gratuity or service pay scheme established under collective agreement, any other scheme provided by employer whose terms are more favorable.

Source: § 35(5,6), 40(1g) of the Employment Act 2007

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